An A to T mutation in the second base of codon 61 of the Ha-ras oncogene has been found in most papillomas initiated by 7,12- dimethylbenz[a]anthracene (DMBA) and promoted by 12-0- tetradecanoylphorbol-13-acetate. In papillomas resulting from promoter treatment alone, however, an A to G mutation was seen in 5 of 8 papillo- mas. Infection of mouse keratinocytes with a defective retrovirus containing the v-Ha-ras oncogene produces cells which develop into papillomas when grafted to the backs of nude mice. Co-infection with the v-Ha-ras and v-fos oncogenes results in cells with a carcinoma phenotype. Increased activity of the AP-1 transcription factor accompanies malignant conversion. Expression of the v-Ha-ras oncogene in keratinocytes is associated with alterations in TGF-alpha, TGF-beta1, TGF-beta2, as well as three of the isoforms of protein kinase C. Levels of TGF-alpha were increased in all papillomas and carcinomas compared to normal skin. In contrast, TGF-beta2 and TGF-beta3, found in the differentiating layers of normal skin and low-risk papillomas, were absent from most carcinomas and from more than 75% of papillomas with a high risk of conversion to malignancy. The cell surface integrin receptor alpha6~4, expressed only on basal cells in skin, is expressed in suprabasal layers of high-risk papillomas and carcinomas. The presence of alpha6beta4 is accompanied by changes in levels of keratins, with K13 decreasing and K8 increasing. A cell culture assay for malignant conversion was developed; following v-Ha- ras infection of keratinocytes, treatment with converting agents in culture induced proliferating foci with the characteristics of malignant cells. In DMBA-initiated mouse skin, rapidly proliferating foci of initiated cells and small papillomas were susceptible to the anticarcinogenic action of staurosporine. FVB mice treated by standard protocols for skin tumor induction develop a large number of carcinomas. The tumorigenic phenotype of a human carcinoma cell line was suppressed by the introduction of human chromosome 11. Neoplastic keratinocytes have an alteration in the PKC-mediated regulation of phospholipase Cgamma.